Compulsory Licensing: A Necessary Evil?

Ed Lamb

Published Online: Friday, June 1, 2007

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Generic drugs usually come to market when patents on brand name products expire or are ruled invalid in the face of a challenge by a potential competitor. Rarely, but with increasing frequency, drugs can become available generically through a government decree and without the permission of patent holders. This third path to generic status is taken most often on behalf of antiretrovirals in developing nations (Table1).

International law allows countries to essentially vacate a patent within their own boundaries through the issuing of a compulsory license. No universally accepted rules exist for when this licensing is acceptable, however.

Thailand?s recent declarations that it would permit the importation, manufacture, and sale of generic HIV/AIDS and anticlotting medications that have several years of patent protection remaining have brought 2 issues concerning compulsory licenses into particular focus.2?4 The first is whether a country should prove it is facing an emergency that can be addressed only by suspending a particular product?s full patent protections. The second is whether ensuring access to low-cost medications can best be achieved through compulsory licensing or negotiations between governments and drugmakers.

Thailand?s ExampleThe World Trade Organization document known as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement spells out member nations? rights to issue compulsory licenses.5 The licenses must provide for royalty payments and are usually limited to products paid for by the government. Significantly, product patents remain in effect under a compulsory license, and patent holders can enforce their intellectual property rights in all other countries.

On November 29, 2006, the Thai Ministry of Public Health granted the country?s Government Pharmaceutical Organization (GPO) permission to begin making copies of efavirenz, which Merck & Co sells in Thailand under the brand name Stocrin.2 The agency followed this on January 29, 2007, with compulsory licenses for clopidogrel (Plavix; Sanofi-aventis/ Bristol-Myers Squibb) and lopinavir/ritonavir (Kaletra; Abbott Laboratories).3,4

The licenses will be in effect through the end of 2011, and Thai officials have said that they are necessary to allow the government to meet its commitments to patients under the country?s universal health care system, particularly the needs of the 500,000 citizens with HIV/AIDS. By one estimate, generic lopinavir/ritonavir will reduce monthly drug costs for HIV patients from an average of 1600 baht to 680 baht, or from about $47 to $20.3

Taking Versus NegotiatingFew question the need for affordable medications; however, brand name drug makers have opposed compulsory pharmaceutical licensing on the grounds that it may be unsafe, unnecessary, and possibly illegal.

Compulsory licenses raise safety concerns because they can create situations where unapproved generics become widely available. In Thailand, unbranded clopidogrel, efavirenz, and lopinavir/ ritonavir will be imported from India until the GPO develops the capacity to make enough of the drugs. The FDA has tentatively approved generic efavirenz made by Aurobindo Pharma Ltd and Cipla Ltd, but the other products have no FDA recognized generic equivalents manufactured in India.6

Beyond this, critics of Thailand?s actions have argued that the country did not comply with either the letter or the spirit of the TRIPS Agreement. According to press reports, the Thai government did not establish that it was facing a national emergency, nor did it try to negotiate lower prices before it invoked its TRIPS rights.2,7 Merck has filed a petition with Thailand?s Intellectual Property Department on these grounds.

Part of this critique may not stand, however, because TRIPS requires only that ?normally the person or company applying for a license has to have tried to negotiate a voluntary license with the patent holder on reasonable commercial terms. Only if that fails can a compulsory license be issued.?5 Countries are under no obligation to show that a crisis exists to grant a compulsory license.

An argument against compulsory licensing of pharmaceuticals that may carry the day is that brand manufacturers have been willing to lower their prices in countries where there is a great need for their products. Merck, for instance, is committed to selling efavirenz at its cost of production in the least developed countries and in medium-income countries with HIV infection rates of =1% of the population. This led to the recent announcement that 600-mg efavirenz will be sold for as little as $0.65/tablet, or $237.25 per patient per year, in these countries. For its part, Abbott is in discussions with the Thai health ministry over lopinavir/ ritonavir pricing. Such discussions successfully prevented Brazil from issuing a compulsory license on lopinavir/ritonavir in July 2005.9

Mr. Lamb is a freelance pharmacy writer living in Virginia Beach, Va, and president of Thorough Cursor Inc.